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Price to book ratio - The result of the following: the financial value of stock, divided by the book value. The result will be the same if it is calculated for the whole company, or if calculated per share. The ratio will compare the market's value of a company with the value that the company has indicated in its financial statements. Is the market ratio higher, the higher will be the premium that the market is willing to pay for the company's stock. Is the ratio low, the company may prove to be a good investment opportunity. This does not count for some types of companies, as they might have hidden assets. This counts for example for businesses in the technology area. |
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